New scheme to allow 5% deposits for homebuyers
Homebuyers will be given the opportunity to buy their homes with deposits of just 5%, under a new government initiative.
Tagged 'Get Britain Building', part of the scheme includes plans to allow buyers to borrow 95% loan-to-value of their property, which will help first-time-buyers in particular.
The government will then underwrite part of the risk so that if the home is sold for less than the outstanding mortgage, lenders will be able to recoup their costs.
Helen Adams, spokesperson for first-time buyer advice-site FirstRungNow.com, welcomes the government's plans.
"With house prices remaining out of reach in many areas of the country and mortgages for first-time buyers being difficult to secure - partly because of the deposit requirements - this scheme will help more first-time buyers and therefore help to kick-start the housing market."
However, the proposals will only apply to new builds. The scheme aims to help 100,000 people, although there are no exclusions on the number of applicants. It is also not yet known what the mortgage rates are going to be like.
The scheme will run for three years from spring 2012
The government also plans to get tough on wealthy social housing tenants. Under its 'Pay to Stay' proposals, tenants on high incomes will have to match private market rents in order to stay in subsidised homes.
A £400 million fund will also go towards helping housing schemes that require extra funding in a bid to address the shortage of new housing in the UK. The scheme aims to build 16,000 new homes, with work beginning in July 2012.
Prime Minister David Cameron and Deputy Prime Minister Nick Clegg say Britain has under-built "for decades" and claim the housing market is "one of the biggest victims of the credit crunch".
In the report, they stated: "The economic and social consequences of this failure have affected millions: costing jobs; forcing growing families to live in cramped conditions; leaving young people without much hope that they will ever own a home of their own."